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14 April 2008 -- The Virginia State Corporation Commission denied a request from Appalachian Power Co.(APCo) to build a $2.23 billion, 629 MW coal-fired power plant in West Virginia that would use integrated gasification combined cycle (IGCC) technology. The SCC also denied APCo's request for a rate increase to begin recovering construction costs for the new plant from its Virginia customers.
The SCC found that APCo's cost estimate was "not credible." It noted that APCo's latest cost estimate was made in November 2006, had not been updated since then and that the company had no plans to provide a detailed and updated cost estimate until after receiving all regulatory approvals. APCo is a unit of American Electric Power (AEP).
AEP spokesman Pat Hemlepp was quoted as saying the company is disappointed, but plans to seek a rehearing. He adds that AEP plans to provide more information about the plant's cost.
The SCC further noted that APCo "has no fixed price contract for any appreciable portion of the total construction costs," that there were "no meaningful price or performance guarantees or controls for this project at this time" and that when APCo eventually attempted to obtain a "turn-key contract with firm pricing, it likely will be a sole-source contract with one bidder."
The SCC agreed with the Office of the Attorney General of Virginia, which opposed the proposal, that the capital cost for the proposed plant "is significantly higher than reported costs for other coal-fired units." The SCC stated, "This [proposal] represents an extraordinary risk that we cannot allow the ratepayers of Virginia in APCo's service territory to assume."
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